Carl Icahn’s Valuable Netflix Lesson: Don’t Listen to Carl Icahn

The lesson of Carl Icahn’s huge home run in Netflix: The activist investor shouldn’t listen to himself.

Icahn Enterprises’ sale of nearly half its stake in Netflix over the past few days, disclosed on Tuesday, crystallized more than half the approximate $1.5 billion in gains it was sitting on after a massive rally in the stock since Mr. Icahn bought in a year ago. Its cost price was $58 a share: it sold for between $304 and $341.

Yet those gains were made despite the fact that Netflix ignored Mr. Icahn’s suggestions that the video streaming outlet put itself on the market. In his initial filing, the investor said that “Netflix may hold significant strategic value for a variety of significantly larger companies that are engaging in more direct competition with one another due to the evolution of the internet, mobile, and traditional industry.”

The episode is a stark contrast to Mr. Icahn’s last entry into the video business, when he bought into video rental chain Blockbuster. Then, after a proxy fight, he won a seat on the board and eventually succeeded in bringing in a new CEO. Despite his involvement, Blockbuster ended up filing for bankruptcy.